1. Letsatsi SMME Workshop 2016

2. Contents Introduction Terms of reference Qualification for benefit Elementary requirements Application process Methodology for assessing SMMEs Evaluation Processes Way forward

3. Introduction Letsatsi Power is a private company producing electricity from Solar energy, with our plant located just outside Bloemfontein Part of our contribution to the local communities is through Enterprise Development (ED) support to local Black owned business The ED Programme targets development of small, medium and micro enterprises (SMME’s) as well as co-operatives within our locality. The programme aims to provide the necessary interventions to develop the required capacity and capability to ensure the sustainability of qualifying businesses. The non-financial support comes in various forms relevant towards addressing the identified needs

4. ED Terms of reference “BBBEE” means black economic empowerment as contemplated in the BEE Act read with the Codes; “BEE Act” means the Broad-Based Black Economic Empowerment Act, 2003; “Beneficiary Communities” means those communities: residing within the 50km radius from the Project Site who have been identified by the Project Company for purposes of ED implementation; and those communities identified by the Project Company as Beneficiary Communities

5. ED Terms of reference "Business Day" any day other than a Saturday, Sunday or official public holiday in the Republic of South Africa; “Code/s” means the Broad-Based Black Economic Empowerment Codes of the Good Practice, issued in terms of section 9 (1) of the BEE Act; “DoE”means the Department of Energy of the Republic of South Africa; “Local Communities” the communities in the nearest residential areas to the Project Site within 50km from the Project Site;

6. ED Terms of reference “Enterprise Development” - contributions actually initiated in favour of beneficiary communities’ entities with specific objective of developing, assisting or accelerating development, sustainability and the financial and operational independence of other enterprises "Qualifying Enterprise Development Contributions" means Contributions actually initiated and implemented in favour of Beneficiary Entities with the specific objective of assisting and/or accelerating the development, sustainability and ultimate financial and operational independence of such entities through the expansion of those entities’ financial and/or operational capacity;

7. Qualification for benefit In terms of the DOE obligations contained in the Implementation Agreement (IA), the project company is obliged to support enterprise development of black owned SMMEs (EME and QSE). The priority focus is to support those within the 50km radius of the project’s plant location. All applicants must have a minimum ownership make-up of 51% black shareholding; NB: This criteria is not the same as that for BEE but specific to Independent Power Producers

8. Qualification for benefit Must be registered and in possession of a valid tax clearance certificate; Must be in possession of all compliance permits and licenses where required; Annual turnover must be R 50 000 per annum, or at least be generating revenue Record of financial performance / financial statements must be available / have bank statement records Certified copies of business owner’s/shareholders’ identity documents; Three-months bank statement of the business; Company profile / proposal / business plan.

9. Elementary requirements Businesses will be nominated based on the following criteria:  Size/type o Preference will go to SMMEs generating revenue and demonstrating growth potential.  Total employment/self-employment o The business employs people other than the owner/s o Business demonstrates potential to develop / absorb more skilled labour  Industry o Labour intensive industries are preferred for their job creation and skills development potential o Industries promoting local content, or contributing to technological advancement

10. Elementary requirements  Establishment o Business has established a market for their services or possesses skills required for production. Both green and brownfields considered  Legal status o Business must be a South African business registered with CIPC and SARS o Must be black owned and BEE verified through independent agencies o Where the field is regulated must have proof of all regulatory compliance requirements  Financial status o Business must be a going concern and not under liquidation

11. Application process The project company administers the application process internally through the Economic Development department. An application form along with other process documents for data collection is transmitted to the potential beneficiaries who expresses the need for support. The CLO or respective institutes takes responsibility to guide the applicants to ensure that correct and complete information is supplied timeously before submitting the application for review. Site visits are done for verification and further assessments Beneficiaries are alerted about the outcome of their application post the evaluation.

12. Methodology for assessing SMMEs In evaluating applicants, sustainability will be considered for eligible initiatives The priority is to promote knowledge and skills development The prioritisation process will consider:  Attractiveness and viability of the business: This criterion involves  examining the industry where each business operates,  the revenue generated by a business,  existing operational constraints, and  employment created by a business. o Priority will be given to those businesses that operate in the manufacturing, agriculture, or labour intensive industries. o Employment - an assumption of the possibility of future job creation should investment take place.

13. Methodology for assessing SMMEs  Eligibility of the initiative for support through the ED commitment: This criterion prioritizes initiatives reflecting the support required by the businesses to:  expand their markets,  grow their revenue and employment, and/or  to improve their survivability. Initiatives will be grouped under fixed and movable assets for prioritization: o Investment into fixed assets - greater priority will be given to investment in expansion or addition to the existing physical structure of the businesses. o Movable assets ( i.e. equipment or machinery) required for the core business (not to day-to-day operational expenses) will receive the higher priority rating.

14. Evaluation Processes Proposals to be evaluated by a committee; Completeness of proposal (attachment / submission of all necessary documents) will play a major part in the success of the application; Communication with regard to the outcome of the submitted proposal will be handled by Letsatsi Power

15. Step forward Check if you are within target areas Identify and quantify your business needs Review your readiness to be supported Communicate with relevant parties to acquire more information ACT – the application for support requires you to personally administer the process